Hornby's London 2012 sales were disappointing

Full steam ahead! Hornby brings production back to the UK

The embattled toymaker is scaling back production in India and China after long-running production problems and weak sales push the firm into the red.

by Elizabeth Anderson
Last Updated: 15 Feb 2016

The iconic toymaker, owner of Hornby model railways and brands including Scalextric, Airfix and Corgi, has suffered major disruptions with one of its largest suppliers in China over the last year and has announced it is bringing some of its production back to the UK.

One of its new products, the Airfix Quickbuild, will now be manufactured in Sussex, chairman Roger Canham said. ‘We estimate that across the group, more than 10 per cent of product ordered was not delivered during the year,’ Hornby confirmed in its annual trading statement.

These supply chain problems, along with sliding sales and rising wage costs in China, helped overturn the company’s fortunes this year and push it into the red.

The company made a pre-tax loss of £3.4m in the year to the end of March, compared with a £4m profit a year ago. Last September, when issuing its third profit warning of the year, Hornby warned that it expected to ‘break even’ in the current financial year. Today’s annual trading update suggests its problems were far bigger than anticipated.

So where did it all go wrong? Sales in the UK, which presents almost two-thirds of its revenue, slipped 5% over the last year, and in recent years the firm has struggled to compete with iPads and computer games.

The firm was also forced to heavily discount stock after sales of its Olympic merchandise were disappointing. Its London 2012 themed toy train sets and fleet of London taxis failed to tempt consumers, and Hornby blamed the weak economic environment for shoppers reining in spending.

Overall, the company made a £1.3m loss on London 2012 products. Problems in its Italian business forced Hornby to write off another £2.4m.

The 106-year-old company traces its roots back to 1907 when founder Frank Hornby established Meccano, and nostalgia has played a big part in the company’s fortunes in recent years. Despite problems over the last year or so, the company is optimistic it can get back on track.

‘Hornby is in a strong position to face the future. Despite the tough economic and consumer environment, we are broadening our distribution base and have made good progress towards developing our range of exciting new products,’ Canham said.

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